Property investors spend hundreds of hours analyzing entry costs — stamp duty, legal fees, loan arrangement charges. Then they sell the property and are blindsided by RPGT. Real Property Gains Tax is the tax Malaysia charges on the profit you make when disposing of a property (or shares in a real property company). The rates range from 0% to 30% depending on three variables: how long you held the property, whether you are a citizen, permanent resident, company, or foreigner — and whether you qualify for any exemptions. Getting this wrong by even one year in your holding period can cost you tens of thousands of ringgit.
What Is RPGT?
Real Property Gains Tax is levied under the Real Property Gains Tax Act 1976 (RPGTA), with rates and exemptions detailed in Schedule 5 of the Act. It applies to:
- Gains from the disposal of real property situated in Malaysia
- Gains from the disposal of shares in a real property company (a company where 75% or more of total tangible assets are real property in Malaysia)
"Disposal" includes sale, gift (in some cases), transfer, and exchange. The tax is charged on the chargeable gain — the difference between the disposal price and the acquisition price, adjusted for allowable costs.
RPGT is not a transaction tax like stamp duty. It is a capital gains tax. You only pay it when you make a profit. If you sell at a loss, no RPGT is payable — though you should still file the required RPGT return (CKHT forms) within 60 days of the disposal date.
2026 RPGT Rate Table
The rates depend on the disposal date relative to the acquisition date, and on the category of the person disposing.
| Disposal Period | Malaysian Citizens & PRs | Companies | Foreigners (Non-Citizens, Non-PRs) |
|---|---|---|---|
| Year 1 (within 1 year) | 30% | 30% | 30% |
| Year 2 (within 2 years) | 30% | 30% | 30% |
| Year 3 (within 3 years) | 30% | 30% | 30% |
| Year 4 | 20% | 20% | 30% |
| Year 5 | 15% | 15% | 30% |
| Year 6 and beyond | 0% | 10% | 10% |
The critical differences:
- Malaysian citizens and PRs reach 0% RPGT after year 5. This is the most favorable treatment of any category and creates a strong incentive to hold for at least 6 years.
- Companies never reach 0%. The floor is 10% regardless of holding period.
- Foreigners pay 30% for the first 5 years and 10% from year 6 onward. They never reach 0%.
For Malaysian citizens, the difference between selling in year 5 (15% RPGT) and year 6 (0% RPGT) is the entire tax amount. On a RM 200,000 gain, that is RM 30,000 saved by waiting 12 months. There is no investment decision in Malaysian property with a better return per unit of patience.
How to Calculate Chargeable Gain
The formula:
Chargeable Gain = Disposal Price − Acquisition Price
But both "disposal price" and "acquisition price" are adjusted for allowable incidental costs.
Acquisition Price Includes:
| Item | Deductible? |
|---|---|
| Purchase price (SPA price) | Yes |
| Stamp duty on SPA/MOT | Yes |
| Legal fees for SPA | Yes |
| Agent commission on purchase | Yes |
| Loan arrangement fees | Yes |
| Renovation costs (with receipts) | Yes |
| Valuation fees at purchase | Yes |
| Furniture and fittings | No |
| Mortgage interest during holding | No |
Renovation costs are deductible — but only with receipts. LHDN can and does request documentation during RPGT assessments. Receipts from licensed contractors carry more weight than handwritten notes. If you spent RM 50,000 renovating a property you bought for RM 500,000, your adjusted acquisition price is RM 550,000 plus other incidental costs.
Disposal Price Deductions:
| Item | Deductible? |
|---|---|
| Legal fees for sale SPA | Yes |
| Agent commission on sale | Yes |
| Advertising costs for sale | Yes |
| Valuation fees for sale | Yes |
| RPGT filing costs | No |
Worked Example: RM 500K Purchase, RM 700K Sale After 4 Years
Scenario A: Malaysian Citizen
Calculating the chargeable gain:
| Item | Amount (RM) |
|---|---|
| Purchase price | 500,000 |
| Stamp duty on purchase | 9,000 |
| Legal fees (SPA) | 5,750 |
| Renovation costs | 30,000 |
| Adjusted acquisition price | 544,750 |
| Item | Amount (RM) |
|---|---|
| Sale price | 700,000 |
| Less: Agent commission (2.5%) | -17,500 |
| Less: Legal fees (sale) | -4,500 |
| Adjusted disposal price | 678,000 |
Chargeable gain: RM 678,000 − RM 544,750 = RM 133,250
RPGT at year 4 rate (20% for citizens): RM 133,250 × 20% = RM 26,650
If this citizen waited until year 6 to sell at the same price: RM 0 RPGT. Saving: RM 26,650.
Scenario B: Foreigner (Same Property, Same Timing)
Chargeable gain: Same RM 133,250
RPGT at year 4 rate (30% for foreigners): RM 133,250 × 30% = RM 39,975
If the foreigner waited until year 6: RM 133,250 × 10% = RM 13,325. Saving: RM 26,650.
| Citizen (Year 4) | Citizen (Year 6) | Foreigner (Year 4) | Foreigner (Year 6) | |
|---|---|---|---|---|
| Chargeable gain | 133,250 | 133,250 | 133,250 | 133,250 |
| RPGT rate | 20% | 0% | 30% | 10% |
| RPGT payable | 26,650 | 0 | 39,975 | 13,325 |
The foreigner pays RM 13,325 more than the citizen at every holding period — and that gap is permanent.
Key Exemptions
1. Once-in-a-Lifetime Exemption (Citizens and PRs Only)
Under Section 21B of the RPGT Act 1976, every Malaysian citizen and permanent resident gets a one-time RPGT exemption on the disposal of one private residence. The exemption covers the entire chargeable gain — you pay zero RPGT regardless of the gain amount or holding period.
Conditions:
- The property must be a private residence (lived in as your home)
- You must be a Malaysian citizen or PR
- You can only claim this once in your lifetime
- You must elect to use this exemption at the time of disposal
This is a powerful benefit. If you have a property that has appreciated significantly and you plan to sell within the first 5 years, using this exemption can save you 15-30% of the gain. Use it strategically — once it is gone, it is gone.
2. RM 10,000 or 10% Exemption (Citizens and PRs Only)
For disposals where the once-in-a-lifetime exemption is not used, citizens and PRs receive an automatic exemption of RM 10,000 or 10% of the chargeable gain, whichever is greater.
On our worked example above (RM 133,250 gain):
- 10% of gain = RM 13,325
- RM 10,000
The higher figure applies: RM 13,325 is exempt.
Revised RPGT for citizen at year 4: (RM 133,250 − RM 13,325) × 20% = RM 119,925 × 20% = RM 23,985 (saving RM 2,665 vs no exemption)
This exemption is automatic — you do not need to elect it. It applies to every disposal where the once-in-a-lifetime exemption is not claimed.
3. Transfer Between Spouses
Transfers of property between husband and wife are exempt from RPGT under Schedule 2, Paragraph 12 of the RPGTA. This applies regardless of whether the transfer is by sale or gift.
The receiving spouse takes on the original acquisition price and date for future RPGT calculations. This means the exemption is a deferral, not an elimination — RPGT will be payable when the receiving spouse eventually disposes of the property to a third party.
4. Transfer to Family Members (Gift)
Transfers by way of gift (love and affection) to certain family members — spouse, parent, child, grandparent, grandchild — receive a "no gain, no loss" treatment. The acquisition price for the recipient is deemed to be the same as the transferor's acquisition price.
5. Property Acquired Before 2000
Properties acquired before January 1, 2000 use the market value as at January 1, 2000 as the acquisition price (instead of the original purchase price). This can significantly reduce or eliminate the chargeable gain for long-held properties that were purchased at very low prices decades ago.
RPGT Filing Process
RPGT is not filed through your annual income tax return. It has its own separate filing process.
Timeline: Both buyer and seller must file RPGT returns within 60 days of the date of disposal (typically the date of the SPA).
Forms:
- CKHT 1A — filed by the disposer (seller) for property disposals
- CKHT 2A — filed by the acquirer (buyer)
- CKHT 3 — application for exemption (once-in-a-lifetime)
Payment mechanism:
The buyer is required to retain 3% of the purchase price (for citizens/PRs), 5% of the purchase price (for companies), or 7% of the purchase price (for non-citizen/non-PR individuals) and remit it directly to LHDN within 60 days of the SPA. This acts as an advance RPGT payment.
If the actual RPGT is less than the retention amount, LHDN refunds the difference. If the RPGT exceeds the retention amount, the seller pays the balance.
Example on the RM 700,000 sale:
- Citizen: Buyer retains
RM 700,000 × 3% = RM 21,000→ Actual RPGT is RM 23,985 → Seller tops up RM 2,985 - Foreigner: Buyer retains
RM 700,000 × 7% = RM 49,000→ Actual RPGT is RM 39,975 → LHDN refunds RM 9,025
Late filing penalties: LHDN can impose a penalty of up to 3x the tax amount for failure to file CKHT forms. In practice, penalties for late submission are typically 10% of the RPGT payable.
RPGT and Your Investment Strategy
RPGT should be built into your exit strategy from day one. The holding period determines whether you pay 30%, 20%, 15%, 10%, or 0% on your gains — that is the widest spread of any Malaysian property tax.
Strategic implications:
For Malaysian citizens: The optimal minimum holding period is 6 years. Selling in year 5 at 15% versus year 6 at 0% is mathematically straightforward. If you are in year 5 and considering a sale, model the after-RPGT proceeds against one more year of holding costs (financing, maintenance, vacancy risk). Almost always, waiting wins.
For foreigners: The 10% floor from year 6 onward means RPGT is a permanent cost of doing business. Build it into your return calculation from the start. On a RM 200,000 gain, the RM 20,000 RPGT is equivalent to roughly 10-15 months of net rental cashflow on a typical RM 1M+ property. Factor it in.
For companies: The 10% perpetual rate makes corporate structures slightly disadvantageous for long-term holds compared to individual citizen ownership (which reaches 0%). However, companies benefit from the ability to offset RPGT against other capital losses and may have other structural advantages for portfolio investors.
Timing consideration: RPGT is calculated on the SPA date, not the completion or settlement date. If you sign the SPA on December 15 of year 5 but settlement occurs in year 6, the disposal is still deemed to have occurred in year 5. Plan the SPA execution date carefully around your holding period milestones.
For the full tax picture for Singaporean investors including stamp duty and rental income tax, see our comprehensive tax guide for Singaporeans. For how foreigners navigate the purchase process, see our guide on buying property in Malaysia as a foreigner.
Calculate Your RPGT
Every disposal is different — purchase price, renovation costs, agent fees, and holding period all affect the final number. Rather than estimating, run your exact scenario through our tool.
Use our RPGT calculator — enter your acquisition costs, disposal price, holding period, and buyer category to get your precise RPGT liability.
RPGT is the exit tax that determines whether your capital gain stays in your pocket or goes to LHDN. For citizens, the path to 0% is clear: hold for 6 years. For foreigners and companies, the 10% floor is a permanent cost that must be modeled into every acquisition decision. The holding period is not just a liquidity preference — it is a tax optimization lever worth tens of thousands of ringgit. Use it deliberately.
Sources & Further Reading
- Real Property Gains Tax Act 1976, Schedule 5 — RPGT rate tables and exemption schedule
- LHDN RPGT Guidelines — official disposal and acquisition rules
- Budget 2026: RPGT Changes — latest RPGT amendments
- Section 21B, RPGT Act 1976 — once-in-a-lifetime RM200K exemption for citizens